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Alabama Aids Advanced Defense Entrepreneurs The Small Business Administration has invested more than $1 million in a group of Northern Alabama small businesses focused on defense and space technologies.

By Catherine Clifford

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Editor's Note: This series takes a close-up look at the SBA's economic "clusters" designed to aid regional businesses.

Alabama, home of NASA's Marshall Space Flight Center, has long been known as a hub for defense and space research.

But in recent years, thanks to funding from the Small Business Administration, the state has developed a new reputation -- that of a supporter of entrepreneurs developing advanced defense technology.

Two years ago, the Huntsville-based Von Braun Center for Science and Innovation, a non-profit research and development organization, applied for an SBA grant to create a "cluster" or business network that could help business owners tap the rich vein of government contracts in the defense industry. The center received $600,000 in 2010 and created the Huntsville Advanced Defense Technology Cluster, becoming part of the SBA's 10-cluster pilot program to aid regional small businesses.

The "bread and butter of what we do is to help facilitate the small business's understanding of the Department of Defense requirements so that the small business can take a shot at going after some of those opportunities," says Jose Matienzo, a NASA lead systems engineer who is also the director of the cluster. For entrepreneurs who can't fulfill a contract on their own, the cluster helps find them another small-business owner to team up with and complete the project.

Related: How Industry Clusters Can Spur Small-Business Growth (Video)

Roughly 300 to 350 companies, many of them based in Northern Alabama, now make up the cluster, and 90% are small businesses, Matienzo estimates. Massive defense contractors like Lockheed Martin, Raytheon and Boeing are also part of the association. The cluster's areas of focus run the gamut from small spacecraft and airships to intelligence gathering and surveillance to innovative energy technologies to unmanned ground vehicles and unmanned aerial vehicles.

Aside from the Marshall Space Flight Center, which employs around 6,000 people and has an annual budget of $2.5 billion, Hunstville is also home to the Redstone Arsental, a major army base that has offices for more than 60 federal agencies on its "campus."

Companies affiliated with the cluster won between $800 million worth of contracts, primarily from the Department of Defense and NASA, in 2011, although it's impossible to know how much of that is attributable to the cluster, Matienzo says.

Related: Trying to Win a Government Contract? Avoid These 3 Mistakes

The cluster received more SBA grants -- $600,000 in 2011 and $385,000 in 2012 – and may receive more funding in coming years. With less money than in its first years, the cluster will still exist, but in an abbreviated form, Matienzo says.

One of the most popular efforts of the cluster has been the creation of a website which, in addition to listing cluster events, serves as a matchmaking service for small businesses seeking government contracts. Area entrepreneurs can log into the website and research opportunities to do work for the government, indicate their interest and connect with other entrepreneurs who want to collaborate on the project. It's "kind of like eHarmony," Matienzo says.

Also, the cluster hosts "ideation sessions," which are essentially instant, live matchmaking between entrepreneurs looking to win government contracts together. "We try to connect them right here, on the spot, live. We get them to connect, we get them to commit," Matienzo says. Networking sessions are either held at the cluster's Huntsville headquarters or in spaces donated by local corporations. Larger conference-like gatherings, called "collaboration summits," allow member businesses to showcase their skills in a display, he says.

Related: What Entrepreneurs Need to Know About Their Brains

The third leg of the cluster's offerings is mentoring: both in group-training sessions and in one-on-one consulting.

For example, Matienzo points to entrepreneur Karen Owen, who came up with the idea to improve on the existing technology for monitoring brain swelling after watching her ailing niece deal with the clunky technology. She stopped by an event co-sponsored by the Huntsville cluster and a woman's business organization, Matienzo says.

The cluster helped Owen, who has an engineering degree and had been recently laid off from her big corporate job, write a technical proposal which she submitted to the National Institutes of Health. In addition to the mentoring and money she got to write her proposal, Owen was able to connect with a biologist and a technical engineer to help her launch her company, called Innovative Research. Owen is currently waiting to hear back from NIH about her proposal.

Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

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